Friday, December 05, 2014

USA Weekend shuts as costs spike and ads tumble

USA Weekend, the second-largest Sunday newspaper magazine in the United States, will print its final edition on Dec. 28, succumbing to soaring distribution costs and plunging advertising. The circulation of the Sunday supplement, which was stuffed into newspapers delivered to as many as 70 million homes a few years back, has fallen today to about 18 million, according to a knowledgeable source at Gannett Inc., the parent of the publication. With advertising sales collapsing by nearly half in the last few years, USA Weekend was expected to produce about $40 million in revenue in 2014, yielding losses in excess of $10 million in each of the last two years, according to the source, who declined to be identified because s/he is not authorized to speak with the press. Some 30 advertising and editorial staffers will lose their jobs in the shutdown. The demise of USA Weekend will leave the contracting Sunday supplement market to Parade Magazine, whose distribution is about 32 million copies. A few years back, its circulation was double that size, according to industry sources. Financial information is not available for Parade because it is privately held. However, industry sources say revenues today are in the neighborhood of $60 million, as compared with $100 million in the last two or three years. Parade was sold in the fall to Athlon Media by Advance Publications, which had owned the title since 1976. The once-robust Sunday supplement business unraveled as the result of the declining economics of newspaper publishing and the changing demands of advertisers. In the heyday of newspapers – when industry-wide revenues and profits were approximately twice as large as they are today – the publishers of USA Weekend and Parade were able to charge local publishers for the right to distribute the magazines in their Sunday papers. When newspaper advertising began the slide that has taken it today to less than half of the record $49 billion achieved in 2005, the Sunday supplement publishers found themselves first absorbing the costs of shipping the product to local newspapers and eventually paying local publishers to distribute their magazines. The flip in the distribution model not only eliminated tens of millions of dollars of annual revenues for the Sunday supplements but also burdened them with tens of millions in new costs. “The cost structure got crazy,” said an executive who tried to turn around the decline at USA Weekend. “You could afford to pay people to take the magazine if you had enough advertising but this doesn’t work if you don’t.”The demand for advertising in Sunday supplements collapsed because most national advertisers are not willing to purchase space in publications that require copy to be submitted weeks in advance. “Advertising in print is soft, anyway,” said the executive. “When you can sell it, you get the copy days before the paper is printed. It is almost impossible to get people to commit a month ahead.” The demise of USA Weekend will punch a hole in the budgets of publishers who were being paid to distribute the supplement. Because the payments are based on the circulation of the participating publisher, metro papers that formerly carried USA Weekend instantly will lose as much as hundreds of thousands of dollars in annual revenues.With the losses at USA Weekend soon to be stanched, Gannett plans to step up the distribution of content and advertising in the USA Today-branded sections it has been supplying to its network of more than 80 daily papers. The modular sections, which are edited by a small team of editors at USA Today near the nation’s capital, are being credited internally at Gannett with producing $20 million in additional circulation revenues for the company’s dailies. This has been made possible, said a corporate source, because the daily USA Today supplements have cut churn and enabled local publishers to increase circulation fees. Building on the momentum the daily sections have achieved, Gannett plans a major ad-sales push in 2015. While the USA Today supplements to date have been available only to Gannett-owned papers, the company has begun a pilot program to offer USA Today pages to non-affiliated papers. The executive said s/he believes the real-time delivery of daily USA Today supplements will please both cost-conscious publishers and modern readers. The delivery of fresh daily content “can produce a more relevant product that can succeed without even selling more advertising,” said the executive. “The months-old articles we used to put in the Sunday supplement don’t have the same value for readers any more.”

4 Comments:

About 20 years ago, if we had more inserts than inserting units, we could drop the Sunday supplement and get no complaints. God help us if we left out the TV book, of course. We carried it because some bonehead at corporate renewed the contract before we could stop him.

Meanwhile, my dear old whitehaired mum -- just the prime demographic you'll note -- tells me she only maintains her subscription for the local coverage and can't understand why they stick in that stuff from USA Today.

VERY bummed to see USA Weekend disappear from my Sunday newspaper. Bad enough that they got rid of Parade and their own local Sunday news magazine years ago, demises that I have long mourned, but now this really sucks. "American Profile", which has been coming in my Monday paper, is also disappearing. Am I the last of the old fashioned hard copy print newspaper junkies? Granted, I'm a 57 year old Baby Boomer who prefers to curl up with my morning newspaper and cup of coffee. You can't curl up with a laptop and I certainly would NOT want to try to read a newspaper or magazine on a tiny phone screen. My eyes are no longer good enough to manage that.

So I'm just extremely disappointed to see things like Sunday news magazines go the way of the dodo. I'll truly mourn when my hard copy newspapers stop arriving before dawn on my doorstep. That will truly be a very sad day for me.

Oh, and I am REALLY seething that the newspapers don't carry a TV guide anymore. That's another thing I REALLY miss. I used to pull that out on Sunday and keep it on the sofa to refer to all week while looking for something to watch on TV. Now? Just gotta take my chances and channel surf until I find something that looks interesting.

Ah, but did you know cable lists all the shows available from your cable company? But the TV guide is easier to do a weekly or daily schedule while the one on TV will give you what is showing but after you locate it, the show is half over.

Tech may be the rage, but in the long run print is more usable and accessible. When was the last time a book you were reading went blank when the battery was weak? Convenience is limited by available wireless, charged batteries, reading glasses to read the fine print, and the money to buy the "tech toys", apps, and access to sites. Oh, for the good old days only 20 years ago.

About Me

Alan D. Mutter is perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time.
Mutter began his career as a newspaper columnist and editor at the Chicago Daily News and later rose to City Editor of the Chicago Sun-Times. In 1984, he became No. 2 editor of the San Francisco Chronicle.
He left the newspaper business in 1988 to join InterMedia Partners, a start-up that became one of the largest cable-TV companies in the U.S.
Mutter was the COO of InterMedia when he moved to Silicon Valley in 1996 to join the first of the three start-up companies he led as CEO.
The companies he headed were a pioneering Internet service provider and two enterprise-software companies.
Mutter now is a consultant specializing in corporate initiatives and new media ventures involving journalism and technology. He ordinarily does not write about clients or subjects that will affect their interests. In the rare event he does, this will be fully disclosed.
Mutter also is on the adjunct faculty of the Graduate School of Journalism at the University of California at Berkeley.